U.S. ECI Growth Moderated in Q4 2022
Summary
- Employment costs slowed by more than anticipated, to 1.0% q/q in Q4.
- Both wage & salaries and benefits slowed in Q4.
- Rise in labor costs in the private sector slowed as well.
The fourth quarter employment cost report showed further moderation in labor costs. The employment cost index (ECI) for civilian workers increased 1.0% q/q in Q4, down from a 1.2% quarterly gain in Q3. The annual pace of increase edged up slightly to 5.1% y/y (nsa) from 5.0% y/y (nsa) in Q3, but still the fastest annual advance since Q3 1990. The Action Economics Forecast Survey had expected a 1.1% quarterly gain in Q4.
Growth of wages and salaries slowed to 1.0% q/q in Q4, from 1.3% q/q in Q3 with the annual rate remaining at 5.1% y/y (nsa). Benefits growth also slowed to 0.8% q/q from 1.0% q/q in Q3. It had been as high as 1.8% q/q in Q1. The annual rate remained at 4.9% y/y (nsa) in Q4.
Labor costs in the private sector also showed signs of moderation in Q4. Private-sector compensation eased to 1.0% q/q in Q4, down from 1.1% q/q in Q3 and 1.5% q/q in Q2, with the y/y rate easing to 5.1% (nsa) from 5.2% (nsa) in Q3. Private-sector wages and salaries rose 1.0% q/q in Q4, down from 1.2% q/q in Q3 and the 1.6% jump in Q2, with the y/y rate slowing to 5.1% (nsa) in Q4 from 5.2% (nsa) in Q3. Growth in private-sector benefits decelerated to 0.7% q/q in Q4 from 0.8% q/q in Q3 and 1.3% q/q in Q2. The y/y rate fell to 4.8% (nsa) in Q4 from 5.0% (nsa) in Q3.
Growth in compensation in goods-producing industries remained steady at 0.9% q/q during Q4 (4.6% y/y nsa). Growth of compensation in service-providing industries eased to 1.0% q/q (5.1% y/y nsa) from 1.2% q/q in Q3.
The employment cost index measures the change in the cost of labor, free from the influence of employment shifts, across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s USECON database. Consensus estimates from the Action Economics survey are in Haver’s AS1REPNA database.
Kathleen Stephansen, CBE
AuthorMore in Author Profile »Kathleen Stephansen is a Senior Economist for Haver Analytics and an Independent Trustee for the EQAT/VIP/1290 Trust Funds, encompassing the US mutual funds sponsored by the Equitable Life Insurance Company. She is a former Chief Economist of Huawei Technologies USA, Senior Economic Advisor to the Boston Consulting Group, Chief Economist of the American International Group (AIG) and AIG Asset Management’s Senior Strategist and Global Head of Sovereign Research. Prior to joining AIG in 2010, Kathleen held various positions as Chief Economist or Head of Global Research at Aladdin Capital Holdings, Credit Suisse and Donaldson, Lufkin and Jenrette Securities Corporation.
Kathleen serves on the boards of the Global Interdependence Center (GIC), as Vice-Chair of the GIC College of Central Bankers, is the Treasurer for Economists for Peace and Security (EPS) and is a former board member of the National Association of Business Economics (NABE). She is a member of Chatham House and the Economic Club of New York. She holds an undergraduate degree in economics from the Universite Catholique de Louvain and graduate degrees in economics from the University of New Hampshire (MA) and the London School of Economics (PhD abd).
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